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The first inhabitants of Madrid were Muslim soldiers under the command of Muhammad I. The founding of the city is usually dated to AD 852 when a fortress (alcázar) was built on the escarpment now occupied by the Palacio Real (see Palacio Real). Few traces of this early settlement survive, apart from a small section of the city wall (see Best of the Rest).

Muhammad I had built his fortress to guard against attack from northern Christian armies and to protect the important city of Toledo. In 1083 Toledo fell and the alcázar of Madrid was surrendered without a fight. The new Christian settlers lived harmoniously with their Arab neighbours (although mosques were converted into churches).

In 1561 Felipe II took the decision to make Madrid his new capital (previously Valladolid had been preferred). The central location and proximity to other royal residences were determining factors. Madrid was still a small, squalid town of 9,000 inhabitants – one of the king’s first decisions was to transform the old marketplace outside the walls into a public square, now Plaza Mayor.

By the time the Plaza Mayor was completed (1619) Madrid’s population had swollen to around 85,000. Courtiers, noblemen, clerics, and criminals descended on the city, leading to such overcrowding that Felipe IV ordered the building of a new perimeter wall. Madrid provided rich material for the playwrights of Spain’s Golden Age including Lope de Vega and Tirso de Molina.

Madrid thrived during the reign of Carlos III (1759–88). He gave the city magnificent gateways such as the Puerta de Alcalá and imposing thoroughfares such as the Paseo del Prado . Streets were paved and lit, sewers were dug and nightwatchmen introduced. He became known as El Rey-Alcalde (the Mayor-King).

On 2 May 1808, two months after a French army occupied the city, the people of Madrid rose in revolt. Fierce street battles were fought, while the troops of the Monteléon barracks mutinied in support of the rebels. But within a few hours, the insurrection had been crushed and the leaders were executed by firing squad.

In 1919 Alfonso XIII opened Madrid’s first metro line and the city was – literally – on the move again, after decades of inertia. Whole streets were demolished to make way for the Gran Vía’s bars and restaurants and Calle de Alcalá became the heart of a new financial district.

Three months into the Spanish Civil War General Franco’s Nationalist army surrounded Madrid. Republican resistance was fierce and the siege dragged on for two-and-a-half years, the city finally falling to the rebels in March 1939.

After ruling Spain with an iron fist for 36 years, General Franco died in November 1975, leaving power in the hands of his designated successor, Prince (later King) Juan Carlos. The first democratic elections were held in June 1977.

On 23 February 1981 Franco loyalists under Colonel Antonio Tejero attempted a coup. Tejero forced his way into the parliament building, firing shots into the air. The conspiracy collapsed when the king confirmed that the army had remained loyal.